Francis Lui
Vice chairman of Galaxy Entertainment Group (GEG), Francis Lui, believes that the next “wave of visitors” in Macau will “not merely look for a gaming experience but a more holistic experience including leisure and tourism.”
In an email interview with the Times, Mr Lui, 59, forecasts that in ten years’ time Macau will maintain its role as the world’s largest gaming hub while also becoming – as the government intends – the world’s “greatest and most well-equipped” center of tourism and leisure.
Macau Daily Times – It was recently reported that Galaxy Macau took the largest share of the gaming market in October. Is this the result of the Phase 2 expansion?
Francis Lui – We never looked at the market share as the only goal; instead, we think ROI [Return On Investment], margins, and non-gaming offerings are all equally important. Delivering healthy rates of investment return and seeking to further drive returns by focusing on attracting higher quality customers, maximizing utilization of assets, and increasing the length of stay have also been our objectives. We believe that the fluctuation of monthly results is subject to a series of market conditions, and as we have always said, we manage our business for the longer term and not on a monthly or quarterly basis. GEG’s strategy has always been to provide the best in terms of offerings as well as services, and we will continue to spare no effort in diversifying our products and to assist Macau’s development into becoming the ‘World Center of Tourism and Leisure.’
Galaxy Macau and Broadway Macau offer the most exciting and diverse attractions in Macau, which appeal to every member of the family. Our products have been well-received by the market; having been greatly encouraged by initial feedback expressing guests’ exceptional enjoyment regarding the concept of Broadway Macau, which consists of Macau’s first-ever street vendor style area with food and entertainment. We are also proud to have brought in many local food and beverage outlets while partnering with various local SMEs. Our performances at Broadway Theatre have also been well received, where tickets were fully sold out.
MDT – October was also the 17th consecutive month of gaming revenue contraction. The market in Macau is obviously going through a lot of changes and relying less on the VIP market. What is GEG’s strategy for coping with these changes?
FL – Focusing on active yield management, we continue to allocate tables to the highest and best use to enhance profitability. We allocate tables to
various segments so long as they are able to push yields up, no matter whether they are in junket VIP, direct VIP, premium mass or mass business. We recently opened more tables at the premium mass and they have proven very successful. There might be a short-term correction in the industry with less reliance on the VIP market, but we are already well positioned for the next wave of growth in mass and family entertainment. With an unrivalled range of shows, retail outlets, restaurants and the highly popular Grand Resort Deck, our focus is on growing a segment of customers who are looking for fun and entertainment.
MDT – Melco Crown just opened Studio City, and new gaming resorts are expected to reshape Cotai in the near future. Do you think that the competition between gaming operators is increasing?
FL – We always welcome healthy competition provided that it is new and innovative to the market, which is good for Macau. Regarding some inaccurate criticism of GEG and our business by one of the gaming operators, we regret that this has happened due to immaturity and arrogance. We hope that one day we will all learn to be respectful towards others and do what’s best for Macau instead of bad-mouthing other people. We believe that all visitors are wise and can judge for themselves who is doing the right thing, offering superior products and contributing to bettering Macau – for visitors as a tourist destination, and for locals as a harmonious city.
By providing elements that are suitable to the current Macau environment, we pride ourselves on continually exhibiting respect and humility while remaining focused on our business operations with clear goals in mind. We continue to proactively invest in diversified non-gaming elements and help promote the development of Macau as the ‘World Center of Tourism and Leisure,’ and our results have been proven successful. (…)
Achieving satisfactory performance, we will continue to ramp up the properties and open the remaining facilities, as we believe that the emerging Chinese middle class is rapidly growing, which would support the longer-term growth of Macau. Therefore, we have further diversified our non-gaming products in Galaxy Macau Phase 2 and Broadway Macau, so as to be best positioned for the next growth wave of visitors, who do not merely look for a gaming experience but a more holistic experience that includes leisure and tourism.
We believe that non-gaming elements will take up a larger share of the market and we will strive to further enhance Macau’s positioning as the world’s favorite travel destination. Our non-gaming and family-oriented entertainment offerings are very popular, with Q3 non-gaming revenue for Galaxy Macau up by 92 percent year-
on-year and 60 percent quarter-on-quarter. No new supply of similar scale and quality was available in Macau for the past few years. We will continue to refine our products to enhance our appeal and drive new visitations to Macau. The market is encountering strong headwinds; therefore, it is particularly important for all of us to pull together and contribute to ensure the continued success of Macau.
MDT – The Secretary for Economy and Finance, Lionel Leong, announced that Galaxy Macau Phase 2 and Broadway Macau will get 100 new-to-market mass gaming tables. The allocation of gaming tables has been controversial and Steve Wynn’s remarks criticizing the system caused a stir. What’s your take on this issue?
FL – GEG is grateful for the allocation of an additional 100 gaming tables granted by the Macau SAR government, which has always been helpful, understanding and transparent. We are very appreciative that we have been able to collaborate quite closely with them. We have been constantly committed to promoting the diversification of Macau’s economy; the opening of Galaxy Macau Phase 2 and Broadway Macau in May has injected numerous non-gaming elements into Macau. At the same time, we have been proactively partnering with local SMEs, and are well-
recognized and supported by both the government and the community.
MDT – How do you envisage Macau in twenty years’ time? Will the region continue to be massively reliant on gaming revenue?
FL – The gaming industry is a main pillar of Macau’s economy and I believe, under “one country, two systems”, this position is unlikely to change in the coming twenty years and beyond. I am very optimistic about the future of the gaming industry in Macau. As the only legal gaming destination in China, Macau is the largest gaming entertainment market in the world that attracts both foreign and mainland customers. With the tremendous growth of middle-class purchasing power, we are very optimistic about the future of Macau’s growing tourism industry, where there will be more diversification – not just in gaming – as customers will want a more holistic leisure, tourism and travel experience.
With this, our Phases 3 and 4 are expected to start soon and will mainly focus on developing non-gaming elements and on MICE, performing arts, and family entertainment. We hope to share more details with you in due course.
Compared to neighboring cities, there are around 60,000 to 70,000 hotel rooms in Hong Kong, 40,000 to 50,000 in Singapore and only about 30,000 in Macau, which shows that there is room for further development. I truly believe that 10 years down the road, Macau will not only be the largest gaming and entertainment city, but also the greatest and most well-equipped ‘World Center of Tourism and Leisure.’
To assist Macau’s transformation, we have to add new elements to our existing offerings. The current market has numerous potential and opportunities, where there will be a boost in the development of the domestic market and cultural industry.
MDT – Galaxy recently bought 5 percent of the shares of Societe des Bains de Mer et du Cercle des Etrangers a Monaco (SBM). What do you expect from this investment, bearing in mind that Monaco and Macau share similar characteristics?
FL – SBM is a world-renowned operator of hotels and casinos in the Principality of Monaco, with a number of iconic hotel and casino brands. GEG is very excited to be making this strategic investment in partnership with one of the world’s most respected, prestigious and globally recognized brands. This is a strategic investment into SBM shares and is the first step in an exciting partnership with SBM, and we look forward to working closely with SBM to our mutual benefit. We will be able to share more details on the potential scope for future collaboration in due course. We will also look at international opportunities, so long as they can enhance shareholder value.
MDT – With the widely anticipated opening of the Hengqin border to Macau residents and drivers, the neighboring island will become more accessible. How does GEG see possible investments in Hengqin and what kind of projects do you think are appropriate to develop in the area?
FL – We are extremely excited about the potential of Hengqin. Our 2.7 square kilometer Hengqin project, located just across the river from Cotai, will complement and assist the growth of Macau. We will continue to work on our development master plan for Hengqin, where our project will meet the changing tastes of future consumers.
The Hengqin land, with approximately 2.5 kilometers of waterfront coastline, has great potential for GEG to build a world-class, low-rise and low-density integrated resort, suitable for the whole family without any gaming elements. We want to develop a truly world-class non-gaming resort to complement our high-energy Macau-based properties, and support Macau as it diversifies its economy and develops as a global tourist destination. We will share the details of the project in due course.
MDT – In terms of corporate social responsibility, what are GEG’s plans for 2016?
FL – Since the launch of GEG, we have been striving to uphold our corporate social responsibility to our community. We are a Chinese-owned enterprise, advocating the philosophy that “what is taken from the community is to be used for the good of the community” and hope that in developing our business, we will also care for the needs of our local society and our country.
We are actively involved in various charity initiatives financially, and participate in areas such as education, culture and sports, environmental protection, and promoting team members’ well-being and volunteer spirit. With a focus on areas of need in Macau and our country, the HKD 1.3 billion GEG Foundation was established last year to reciprocate the support we have received from our country and the people of Macau. The GEG Foundation focuses on giving back to society by helping young people develop positive moral and life values, foster patriotism and ethnic identity, and enhance their understanding of the country and Macau.
We also see our involvement in sports development as part of our continual effort to promote Macau’s social and cultural diversity. We have been title-sponsoring Macau Galaxy Entertainment International Marathon and FIVB Volleyball World Grand Prix Macau for twelve and ten consecutive years, respectively. (…)
One of the proudest things I can say is that our team members have also been affected by GEG’s commitment to our society: we started a volunteer team in 2011 and now we have more than 1,100 members who allocate and sacrifice their personal time to participate in many of the charity and volunteer activities in the city, and have contributed over 6,500 hours to help those in need. In September, the ‘Lui Che Woo Prize – Prize for World Civilization’ was established to promote this optimistic attitude and to mark the 60th anniversary of KWah Group.
My father is a staunch supporter of traditional values that promote benevolence and peace; these tenets and his deep compassion for humanity inspired him to establish the Prize to extol those individuals or organizations who have selflessly dedicated themselves to the nurturing and enrichment of world civilization. PB
new openings ‘very well received’
The expanded Galaxy Macau and Broadway Macau have “created a new buzzing entertainment hub for Macau where the occupancy rates of Galaxy’s six hotels were near full capacity,” Francis Lui says. Galaxy’s deputy chairman stresses that the new openings “have been very well received” and “visitation has increased significantly.”
“Our offerings are very different from those of other existing properties; we have many unique features that are first in Macau and even in the world. Additionally, our new family-friendly offerings not only attract a new and varied profile of visitors to Macau, but our existing customers keep returning to experience more of what we have to offer – both at the product and service level,” he adds.
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